Tax Book 2023

Chapter 07 Solved Past Papers Sales Tax Numericals of CA Module C

(i) Supplies made during the month were as follows:

Gross amount Discounts allowed Net amount

Q.No. 7 Autumn 2013

FaizanisregisteredundertheSalesTaxAct, 1990 andisengagedinthebusinessofmanufactureandsupplyofengineeringgoods.
Following information has been extracted from his records for the month of August 2022.

-------------------- Rupees --------------------

960 Conceptual Approach to Taxes

Local supplies to registered persons

• Noori Limited 16,000,000 800,000 15,200,000


• Soori Limited 4,000,000 400,000 3,600,000
  Local supplies to unregistered persons 4,200,000 210,000 3,990,000
  Exports to Jordan 6,000,000^ - 6,000,000
  (ii)

(ii)

(iv) Following purchases were made during the month:

Rupees

Local materials from registered persons 27,000,000

Local materials from unregistered persons 3,000,000

Faizannormallyallows5%discounttoallitscustomers.However,asaspecialcase,adiscountof10%wasallowedto

Soori Limited. All the discount were shown on the invoice.

SuppliesworthRs.617,500(netofdiscount)werereturnedbyNooriLimited.Properdebitandcreditnoteswereissued

in this regard.

-------------------- Rupees --------------------

Local materials from unregistered persons 3,000,000

(v)

(vi)

(vii) Sales tax credit brought forward from previous month amounted to Rs. 850,280.

(viii) Sales tax is payable at the rate of 17% All the above figures are exclusive of sales tax.

Required:

Solution

FaizanisrequiredtopayapenaltyofRs.10,000undertheSalesTaxAct, 1990 onaccountofcertaindefectsinthe

maintenance of records.

RecordsindicatethatapumpandamotorweregiventoFizan'sfriend,freeofcost.Thelistpriceofthepumpandmotor

was Rs. 33,000.

ComputethesalestaxpayablebyorrefundabletoFaizanalongwithinputtaxtobecarriedforward,ifany,inthesalestaxreturnfor
the month of August 2022.

Mr Faizan
Sales Tax Liability
Tax Period: August 2022

Rupees
Output tax:
Rs. Rate of sales tax Sales tax Rs.
on local supplies to registered persons

• Noori Limited U/S 3 15,200,000 17% 2,584,000


• Soori Limited (value after 5% discount) U/S 3 3,800,000 17% 646,000
  On local supplies to unregistered persons (N - 4 & 6) 3,990,000 17% 678,300
  On exports to Jordan [U/S 4 read with 5th Schedule] 6,000,000 0% -
  On goods given to Friend, free of cost U/S 3 33,000 17% 5,610
  Less: sale return [U/S 9 read with Rule 22] 617,500 17% (104,975)

Solution

Less: sale return [U/S 9 read with Rule 22] 617,500 17% (104,975)
29,640,500 3,808,935

Input tax:

On taxable supplies (N - 2) 3,641,097
Sales tax credit brought forward 850,280
(A) 4,491,377

(B) 3,428,042

Less: Admissible input tax: Lower of (A) or (B) 3,428,042
Balance sales tax payable for the period 380,894
Add: penalty 10,000
Total sales tax / penalty payable 390,894

90% of output tax (N - 3) (Rs.3,808,935 x
90%)

Total sales tax / penalty payable 390,894
3% further sales tax on supplies to un-registered persons (N - 4) 119,700

960 Conceptual Approach to Taxes